Oil futures spiked Sunday night after Israel launched drone strikes against Iranian natural gas plants, sending shock through the energy market and smashing risk assets across the board.
The news, reported by Iranian state media and confirmed by The Jerusalem Post, showed two key South Pars gas facilities were hit Saturday by Israeli unmanned aerial vehicles, while another attack reportedly targeted an oil depot near Tehran.
The response came just two days after Israel carried out air raids on Iran’s military leadership, missile sites, and nuclear infrastructure, raising fears that the conflict will spill into energy routes and supply systems.
The attacks caused US crude oil to jump $2.72—a 3.7% gain—closing at $75.67 per barrel. Global benchmark Brent crude rose $3.67, up 4.94%, ending the day at $77.90. The rally followed a massive 7% surge on Friday, marking the most volatile move in the oil market since Russia’s 2022 invasion of Ukraine. Combined, last week saw a 13% gain in US crude alone.
Iran retaliates, warns of shutting vital oil route
The escalation didn’t stop at Israel’s offensive. According to The Times of Israel, Iranian missile strikes struck a major refinery in Haifa, worsening concerns over global oil supplies. Tensions remain high as the war enters day three, with no indication that either side will step back.
On Saturday, a senior Iranian commander threatened to shut the Strait of Hormuz, the strategic chokepoint through which more than 20% of global oil exports move. If that happens, it could paralyze international energy logistics.
Stock futures tumbled as soon as markets opened. Dow Jones Industrial Average futures dropped 92 points (or 0.2%), while SP 500 and Nasdaq 100 futures both fell by 0.2% as well.
This came on the heels of a brutal Friday session, when the Dow plunged over 700 points. All three indexes finished the week in the red—Dow down 1.3%, SP 500 lower by 0.4%, and Nasdaq Composite closing with a 0.6% loss.
Crypto stays largely muted as gold surges
Investors ran to safety. Gold rallied hard, reaching $3,450. Global currencies took a hit. The euro fell to 1.1555 against the dollar, down 0.39%. The British pound dropped 0.45% to 1.3565, while the Japanese yen rose 0.66% to 144.14 per dollar. The Canadian dollar slid to 1.3587, and the Australian dollar dropped sharply to 0.6485, down 0.66%.
The crypto market has managed to stay flat through it all. At press time, Bitcoin was worth $105,182, down 0.32%. Ethereum was up 0.15% to $2,538, while Cardano and XRP both rose 1%. Dogecoin dropped the most, falling 2.08% to $0.1751.
Market watchers are now locked in on manufacturing survey data coming Monday morning, right before the Federal Reserve’s rate decision on Wednesday. With current expectations holding firm at a 97% probability of no change, the spike in oil prices is throwing a wrench into hopes for a pivot.
As you may know, president Donald Trump has been publicly pressuring Fed Chair Jerome Powell for a rate cut. But with energy costs ballooning, odds of a policy shift are fading fast.
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